A farewell to Iran: US companies are leaving the country

In six months, Iran will turn into a potentially very profitable market for companies that are not afraid of Washington's sanctions.

Kamyar Adl via flickr

Currently, European companies are preparing to turn off business in Iran in order to keep the American market open themselves. The situation of their American colleagues is even worse. Companies of the Old World, even theoretically, can still count on the support of Brussels, but there is no one to support their American colleagues.

There is still almost half a year until November 5, after which any activity in Iran or cooperation with Iranian companies and banks will automatically be considered a violation of sanctions. However, companies operating in this country are beginning to prepare for departure in advance. Dozens of American companies, among which are well-known multinational giants, are feverishly getting ready to leave Iran. Among them are such large companies as Dover Corp., Honeywell International Inc., Chubb Ltd., General Electric Co. In total, at least 17 companies registered in the US began to work in Iran through foreign subsidiaries in January 2016, when the deal on the Iranian nuclear program entered into force. According to the Securities and Exchange Commission of the United States (SEC), they have earned more than $ 175 million in Iran over a year and a half. But this is only the tip of the iceberg. In Iran, there are many private companies from America who are not obliged to report to the Commission.

With the unilateral withdrawal of the USA from the deal in May, the so-called General License H automatically stops operating. The license allows American companies with branches abroad to engage in trade, financial and other activities in Iran. Thus, the White House hopes to isolate Iran both in politics, and in the financial and economic spheres.

In early May, immediately after Donald Trump’s announcement on withdrawal from the deal, the United States explained that all companies operating in Iran, including, of course, the US, should wind up all activities until November 5. The prohibition does not apply to food and medicine trade.

Unlike European companies such as Renault, Siemens AG and Total, American firms are trying keep it quiet with Iran. Despite this, many American businessmen had high hopes and made big plans to develop the Iranian market with its 80 million consumers.

A representative of the company Dover, which sells details of pumps used in the energy sector to Iranians, directly stated that the abolition of License H means their departure from Iran. The company expected to earn more than $ 16 million on contracts made in 2017. Now, these hopes will have to be forgotten.

The world-famous corporation General Electric, which sold in Iran valves and spare parts for equipment used in the energy industry of Iran for $ 25 million annually, is leaving the country, too.

Another giant - Honeywell - earned $ 115 million in Iran in 2016-17 and was expected to significantly increase profits. But Donald Trump’s coming to power and his decision to withdraw from the deal and return the anti-Iran sanctions forced him to abandon these plans.

Energy companies prevail in the list of American companies operating in Iran for obvious reasons. However, as experts note, insurance companies will suffer the most from the cancellation of the validity of License H. Some of them managed to insure the whole fleet of cargo ships, which since 2016 began to migrate to Iranian ports, and thus earned tens and hundreds of millions of dollars. Such insurers, one of which is the company Validus Holdings, will be subject to huge fines and other penalties if they continue to work with the ships carrying oil and other cargo to the Iranian ports. Naturally, they are also curtailing their activities in the Islamic Republic of Iran. However, even if the insurers had the courage to ignore the instructions of the US Treasury, they would still have to at least drastically reduce the scope of their activities, because they will soon have no one to service - fearing Washington's sanctions, shipping companies are also massively breaking contracts and refusing work with Iran.